Hot air over the price of gas

The recent decline in gasoline prices has at least temporarily made this a less pressing issue in the presidential campaign. There is a real risk, however, that the summer driving season will again push the price to near $4 a gallon and that it will again assume center stage in the national political debate.

That would be unfortunate. No one can be happy about paying more money for gas. But the question is what can Barack Obama, or any other president, really do about it? The answer, which may disappoint some people, is not much.

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Former Massachusetts Gov. Mitt Romney, the likely GOP nominee, apparently plans to blame Obama’s environmental restrictions on drilling for the high price of gas. This is wrongheaded for two reasons.

First, Obama has not imposed many restrictions on the energy industry. In fact, production of oil and natural gas has increased sharply since he took office. U.S. crude oil production has increased by close to 20 percent, according to the Energy Information Agency, from about 5 million barrels a day in 2008 to more than 6 million barrels a day this year. The increase in natural gas is even more striking. Production is up by more than 25 percent — from 50 billion cubic feet a day in 2008 to more than 63 billion cubic feet a day this year.

These production increases are extraordinary by any measure. They wouldn’t take place with an environmental dilettante in the White House. In fact, some of us may wish that he paid more attention to environmental concerns.

The other reason this complaint is silly is that U.S. production has minimal impact on oil prices. Those prices are determined in a world market. Even with the production increase over the past four years, U.S. output accounts for only about 9 percent of the world market.

If the oil industry was given its full wish list and allowed to drill wherever it wanted, it’s almost inconceivable that it could increase production by more than 20 percent. Even this increase would take several years, since drilling in places like the Arctic Ocean off Alaska’s coast requires considerable lead time.

A 20 percent increase in U.S. production is roughly a 2 percent increase in world production. Part of a U.S. increase would probably be offset by reduced supply elsewhere. But even if it were not, we would likely see a reduction in the price of oil of only 6 percent to 7 percent. This would likely save us less than 20 cents on each gallon of gas. And this is based on almost ridiculously optimistic assumptions from the standpoint of the drill-everywhere crowd.